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KAR - KAROON ENERGY LTD


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Looks like the market didn't like the news released by Karoon last night. I was reading the body of the story and it didn't seem that great but the summary seemed to paint a brighter picture. I have a short attention span so maybe I missed the news in the body. I bought this share at $8 and after many ups and downs I couldn't stomach it any more and got out at $11 just before it started its tumble (more ass than class). Is it good value now. I am getting confused not if they haev found anything that is confirmed and if they haev what does that equate to on a NPV scenario. Any body out there that can help a part time trader?
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From their progress report:

Forward Plan

The next test of the greater Poseidon structure is Kronos-1, located on the south-western high. This well is

designed to test interpreted higher quality Plover Formation C sand interval reservoirs located high on the

structure and also to test Formation B sand interval reservoirs updip from the Poseidon 2 well. Kronos-1 is

aimed to confirm commercial production rates from possible future development production wells located on

the crest of the greater Poseidon structure.

The Transocean Legend semi-submersible rig is drilling the exploration well, which is operated by

ConocoPhillips.

 

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  • 3 weeks later...

What are the chances of Woodside making some kind of bid for all/part of KAR?

 

My feeling would be that if Kronos 1 sufficiently proves up Poseidon then Woodside should be all over them. Obviously Poseidon being immediately adjacent to Browse fields, Brecknock/Calliance, etc. Woodside also mentioned the Argus field as possible feedstock for Browse LNG in their presentation the other day, first time ive seen it mentioned. A pipeline from Argus tied back to Brecknock/Calliance would go straight over Poseidon.

 

Upside for Woodside would be all KAR's Brazil acreage which looks outstanding, nearby discoveries, not far from Woodsides Brazil leases, etc. Plus other KAR acreage in Peru, etc.

 

But Woodside may not have the $$ and/or probably focussed everything on Pluto at the minute!

 

Any thoughts?

 

DJ

 

 

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WPL would be the natural Aussie owned predator for KAR... but if you want to think about predators, then think about the offshore players too... Shell not so many years ago wanted to buy all of WPL (thankfully Mr Costello did something useful and blocked that idea) but the Aussie Govt may not protect KAR...

 

then there is the natural threat from Conoco... lets face it, they know exactly what is going on with KAR and the Poseidon field and they were recently happy enough to spend about US$100m to pick up 9% more of WA-314p & WA-315p... extrapolate that and it suggests they would happily pay about A$500m for the remaining 40% of those leases (but I expect there is no way Hosking would sell them the other 40% on those sort of terms). The question is how much would they pay for the remaining 40% of WA-398p, the five blocks in Brazil, the two blocks in Peru, and the small block in the Timor Sea? I would have thought a A$2billion bid to buy all of KAR would be easily plausible. However, I wouldn't expect KAR mgmt to endorse it to shareholders, as the Brazil assets alone are probably worth at least US$2.5billion on their own~!!!

 

then there is the current Brazil farm in process to take into account... who knows what that process looks like, and what sort of asking price is attached to the farm in... but given the Santos Basin is the hottest ground in the O&G business at the moment, you would expect it will be at least US$100m per block to get 50% of the action... if I was a big cash rich O&G company, I'd say to myself, why spend US$0.5 billion to get a slice of the Brazil pie, when for a few extra dollars I can have the whole Brazil pie, a Peru pie, and a Aussie pie which comes ready made with a big juicy multi TCF gas discovery in the Browse Basin~!

 

King Karoon is mega cheap at these levels IMHO...

 

:king:

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Thanks Marwoode, agree with those comments. Big IF is obviously Poseidon, if they prove any sort of decent gas flow from this well then lookout. If i was a predator i would want to be sure it flowed, hence i believe this would be the catalyst for anyone wanting a big piece of KAR. You would have to think the odds of gas being encountered and subsequently flowing are >30-40%? On this basis i think the risk/reward looks very good at current price...IMHO

 

Cheers

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